Question

Read this Paragraph and Answer the three question thanks

The nation's final employment report before Tuesday's presidential election showed the economy has gained momentum recently but is still growing far below its potential, helping both candidates frame their closing arguments to voters. The Labor Department said Friday that employers added a seasonally adjusted 171,000 jobs in October. Figures for previous months were revised higher, showing the economy has added an average 173,000 jobs a month since July--more than double the pace in the spring. The unemployment rate rose to 7.9% last month from 7.8% in September, largely because more Americans began searching for jobs. Even though the report was better than many investors had anticipated, the Dow Jones Industrial Average fell 139.46 points to close at 13093.16. No president since Franklin Delano Roosevelt has run for re-election with unemployment so high. Since 1948, only four presidents--Gerald Ford, Jimmy Carter, Ronald Reagan and George H.W. Bush--have sought re-election with joblessness above 7%. Mr. Reagan was the only one to succeed. For President Obama, Friday's report reinforced his argument that the job market is on the mend, with employers adding jobs for 25 consecutive months after eliminating hundreds of thousands a month at the start of his term. The number of nonfarm payroll jobs is higher now than when the president took office in January 2009. The report adds another detail to the broader picture of an economy picking up. Home sales, prices and construction are rising. Consumer confidence is at its highest level in 41?2 years, and Americans are stepping up their spending at restaurants, shops and other retail establishments. Manufacturing activity is growing again, albeit very slowly, after three months of decline during the summer. However, unemployment is up from its 7.8% level when Mr. Obama took office. Republican nominee Mitt Romney cites this as evidence that the president's policies have failed. More than 12 million people remain out of work--a figure that rises to 23 million when taking into account those stuck in part-time jobs who would prefer to have full-time ones and those too discouraged to search for work. The pace of job growth in 2012 is roughly the same as it was last year. The economy grew at an annual rate of just 2% in the third quarter, below the roughly 3% pace notched during healthier times. Mr. Obama, campaigning in central Ohio Friday, pointed to the jobs report as a reason to grant him a second term. "In 2008 we were in the middle of two wars and the worst economic crisis since the Great Depression, and today our businesses have created nearly 5.5 million new jobs," the president said at an event in Hilliard, Ohio, referring roughly to the number of private-sector jobs added since early 2010. "And this morning we learned that companies hired more workers in October than at any time in the last eight months." Friday's report provided relief to the president's aides who feared that a negative reading could give Mr. Romney a final burst of momentum. But Mr. Romney portrayed the figures as evidence of a lackluster recovery burdened by the president's policies. Mr. Romney has repeatedly noted that the unemployment rate failed to fall as quickly as the president predicted when urging passage of his 2009 stimulus package, and that the recovery has been very slow compared with previous ones. "We've almost forgotten what a real recovery looks like--what Americans can achieve when we limit government instead of limiting the dreams of our fellow Americans," Mr. Romney told a crowd in West Allis, Wis. With national polls tight, voters tend to give Mr. Romney a more favorable score on the economy. About 45% of registered voters said he would be better prepared to create jobs and improve the 14 December 2012 Page 1 of 3 ProQuest economy in the next four years, compared with 41% who said the same of Mr. Obama, in a late-October Wall Street Journal/NBC News poll. With the economy improving recently, Mr. Romney has broadened his argument beyond joblessness, saying the president's policies and spending could put the nation at risk of falling back into recession. Mr. Obama has criticized Mr. Romney's economic policies and highlighted his opponent's conservative positions on women's issues and immigration in a bid to appeal to some voters. An average of national polls by website Real Clear Politics showed Mr. Obama with 47.5% of the vote on Friday, compared with 47.2% for Mr. Romney. Yale University economist Ray Fair has developed a mathematical model that uses data from previous races to assess a president's re-election prospects, focusing on growth in gross domestic product (a measure of the economy's output of goods and services), inflation and jobs in the final year of a president's first term. Mr. Fair said his model currently shows the race evenly split between Messrs. Obama and Romney. "The bottom line of my work, given what the economy has done, is that it's a very close election and I really cannot with any confidence predict the winner," Mr. Fair said. The dueling campaigns agreed that voters' perceptions of the economy were mostly set before Friday's report. Some political observers also played down the importance of the latest data, saying voters are typically influenced more by how the economy has performed over a number of months than a single month. "I don't think it changes the game very much one direction or another. There's good news for both parties in this," said David King, a senior lecturer in public policy at Harvard's Kennedy School of Government. "It's most likely going to confirm peoples' predispositions." For some investors, the recent stream of positive economic news has become a matter of concern for stocks. They worry it could help bolster President Barack Obama's re-election chances, something that has been viewed as weighing on stocks. Also, an improving economy could encourage the Federal Reserve to lighten up on its stimulus. Colleen McCain Nelson, Jonathan Cheng and Carol E. Lee contributed to this article. Write to Jeffrey Sparshott at and Eric Morath at Credit: By Josh Mitchell and Sara Murray

1. Give two reasons why the unemployment rose even though the economy created a significant number of new jobs.

2. What policy actions have been taken by the Obama administration since January 2009 to help lower the unemployment rate? Have these actions been successful in lowering unemployment?

3. What is the likely long-term impact of these fiscal policy actions on unemployment? On inflation? On the public debt? If fiscal policymakers focused just on long-run consequences, what actions should they have taken in 2009?

Answer 1

1. The unemployment rose even though the economy created a significant number of new jobs because of slow economic growth at the backdrop of two wars and the worst economic crisis since great depression and because of more Americans began searching for jobs.
2. Bail out of the U.S. auto industry, Reformation of Health Care, Regulation of the Big Banks and hedge funds that led to the financial crisis, $858 billion tax cut in 2010 and Withdraw of Troops from Iraq and Afghanistan Wars. These actions been successful in lowering unemployment rate to 4.7 % and the economy gained a net 11.3 million jobs during the following years.
3. The long-term impact of these fiscal policy actions on unemployment will be the creation of more and more new jobs, which will eventually bring the unemployment rate down significantly. Inflation will be lowered but public debt will be higher. They should have focused on reforms to the financial system architecture, brought future deficits down, regulation of bank capital and liquidity and government support for the banking sector.